So basically all the 2011 3rd quarter earnings are out, and not surprisingly, everyone’s been doing pretty well! Corporate America is sitting on a huge pile of cash that’s starting to be used to buy back shares and hand out dividends. However, they have not been hiring (at least nationally), because after the 2008 scare, Corporate America has realized that to survive this economy, you need cash (Cash is King!). Despite the huge profits, stocks have gone basically nowhere. Why?
“Your greatest enemy is yourself” is an ancient Chinese piece of wisdom. The only person you need to beat and conquer is yourself. How many entrepreneurs have proclaimed that they plan on creating the next Wal-Mart, only to work a few hours a week on their “epic” business idea? How many times have you said that you won’t give up, but in reality, run away at the first sign of trouble?
Investing is no different. Without discipline (let me say this as harsh as possible), you are A NOBODY. You can subscribe to the greatest investment newsletters. You can buy a library full of investment books. You can attend every single investment seminar in town. You can probably even buy a $3 million investment system, but in the end, you’ll find that you’re no better than the average Joe Schmoe if you don’t have the courage to discipline yourself. You may have immense amounts of knowledge about “how to” invest, but without that discipline, good luck with your futile attempts to apply that knowledge into decent investment returns.
Another month already. Wow. How time flies by. It’s been a crazy month, not really for my investment portfolio, but for my blog and personal life. I’ll get into more detail about that later in this blog post. But first, I want to show you some statistics.
- 73 Facebook fans.
- 66 Twitter followers.
- 57 RSS subscribers.
Ad revenue from October 1 – October 31.
This post took me a looooooong time to write, simply because it was so painful. As much as I hate to admit it (and probably you too), pensions have now turned out to be the biggest ponzi scheme in history. Although there are no exact numbers, experts estimate that there are trillions of dollars worth of unfunded pension liabilities in the U.S. alone. Let’s use a little bit of logic here, and we’ll realize that there is ABSOLUTELY no way the problem with those unfunded pension liabilities will be solved.
So stocks are scarring the average person, because of all the volatility we’ve seen (40% fluctuations a year, anyone?). Bonds are terrible too, as they pay next to nothing.
So the obvious question is, should you invest in real estate? The two choices you have are: American real estate, and an international investment property.
My thoughts on American real estate.
Obama, through previous mortgage incentive programs, has made sure that all those who wanted to buy a house buy it last year. So basically, he collected all the housing demand we would have for a few years, and put that demand all into the time frame of one year (when the mortgage incentive program was still available). So what happens now? Where’s all the housing demand supposed to come from? The sky?
Now with all this talk about a double dip recession, what would happen to American real estate if the economy did indeed slip back into a recession (not that we got out of one, in the first place)? Owning a house is completely discretionary spending. One can put off having kids, move in with family or a friend, etc.
Also, I’m a firm believer in cycles. Real estate cycles tend to last pretty long (13-20 years). This housing bubble that just burst back in 2006? Could take a while before the secular bear market for American real estate is over.
Foreign real estate.
Obviously, one would ideally want to buy bmv property (below-market-value-property). However, the value of real estate in the first place is hard to judge. Back in late 2008-early 2009, the real value of many homes in America was $0, because no one wanted to buy them. So how do you judge an the value of real estate in a foreign nation? Truth is, you really can’t. Real estate is a highly localized investment, and unless you live in the area, you wouldn’t really understand how much the land should be valued at. That is why, as a real estate investor, you have two choices.
An important decision when your investment is yielding handsome profits is whether or not you should close your investment (thus lock in your profits) or hold onto your position and hope for even more profits. Here’s how to decide.
Ok. So maybe repairing our decaying infrastructure isn’t the best thing to do. Or maybe it is. But it’s certainly better than spending billions on fighter planes and giving tax benefits to bankers (who end up destroying the economy). Over the past few years, we’ve seen the TARP and all these other American recovery programs. Funny thing is, I don’t see any difference. All these TARP programs did was temporarily bail us out (actually, they didn’t bail us out. They bailed out those who don’t deserve help a.k.a bankers). Cash for clunkers. Mortgage assistance. All these things did was to temporarily make the whole picture look nice and rosy. The instant the program ends, everything heads south.
I have a lot of thoughts on investing I want to share with you guys. As you may know, I prefer to write long posts, and none of these individual thoughts take a long time to describe. So I’ve decided to group these thoughts together into the second, monthly Random Thoughts on Investing – September 2011. You may or may not agree with my thoughts, but that’s ok. It’s always good to read about others’ opinions. In the comments section, I hope to read your opinions too about my thoughts.
In a modern, global economy where making purchasing decisions is as simple as getting cheap insurance quotes online, the financial state of affairs for the last several years has proven difficult for most. Yet, before the mess of the last financial crisis has even begun to pick up the pieces, the economy threatens to buckle once again. So is it time to panic that we’re on the verge of another financial meltdown?
According to the U.S. Bureau of Labor Statistics, projected employment will only increase 10.1% by 2018. This is not enough to keep up with the current rate of population growth, much less make a dent in the unemployment numbers that remain stubbornly stagnant at over 9%.
Investing in bull markets is simple. Just buy and hold. Anyone can do that. But investing in a bear market is tough. Here are 9 rules that will help you weather the crash, not necessarily unscathed, but in a much better condition than many other investors.